Page 11 - AsianOil Week 25 2022

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Russia emerges as top

Chinese oil supplier in May

PERFORMANCE RUSSIAN oil exports to China soared 55% in the extra imports from Russia.
May, as Chinese refiners ramped up purchases India and countries in the Middle East have
of discounted Urals crude. also stepped up Russian oil supply to exploit the
China is one of a number of buyers not on discount. Western efforts to deprive Russia of its
board with Western sanctions against Russia to oil export revenues to fund war in Ukraine have
have taken advantage of the hefty discount that also been undermined by soaring international
its flagship oil blend now trades at. Prior to Mos- oil prices. In fact, Russia earned 40% more in
cow’s invasion of Ukraine, the Urals discount hydrocarbon revenues in May than in the same
was only $10 per barrel, but this has now almost month last year, according to a study by the Hel-
quadrupled as Western buyers have shunned the sinki-based Centre for Research on Energy and
fuel. Clean Air.
Imports of Russian oil, including supplies In its study, CREA called on Western policy-
delivered by the East Siberia-Pacific Ocean makers to target the shipping of Russian oil to
(ESPO) pipeline and seaborne deliveries, prevent the country simply diverting its oil to
amounted to almost 8.42mn tonnes (2mn bpd) other markets. Over two thirds of the oil that
in May, Chinese customs data shows, up from Russia exported in the first 100 days of the war in
1.59mn bpd in April. The growth meant that Ukraine was on board ships owned by EU, UK
Russia displaced Saudi Arabia as China’s top and Norwegian companies, the centre estimated,
supplier. The kingdom dispatched only 1.84mn exposing this trade to sanctions risk. Russia can-
bpd of crude to the Chinese market last month, not simply divert oil supplies from Europe to
marking a rise of 9% year on year. Asia via pipeline, as the pipeline systems of east
Chinese companies, including the country’s and west Russia have limited connections. As
largest trading company UNIPEC, are under- such, it has resorted to putting more oil on board
stood to have hired additional tankers to handle ships to access non-Western markets.™

Japan raises objections to reported Chinese

exploration push in East China Sea

POLICY THE Japanese Ministry of Foreign Affairs has representatives from the two countries were
raised its objections to a reported Chinese explo- reported to be meeting on June 23 to hold talks
ration push in a contested area of the East China over Chinese unilateral exploitation in the con-
Sea. The ministry said last week that it had con- tested area. As of press time, details of the out-
firmed the ongoing construction of a facility that come of the meeting had not emerged. However,
it believes to be for unilateral gas development by in the run-up to the meeting, analysts were not
China in the region. optimistic over a resolution to the dispute being
The ministry lodged an objection with the reached.
Chinese Embassy in Tokyo, saying the develop- The discussions represent the first high-level
ment was “extremely regrettable”. contact on the issue since November. Ahead
This comes after Japan and China had pre- of the meeting, Tokyo was expected to ask that
viously agreed on joint gas development in the Beijing resume discussions on joint develop-
region in 2008, but subsequently suspended ment rather than pushing ahead with unilateral
negotiations on moving forward with the plan exploration.
in 2010. Tokyo was also anticipated to express its
Japan views the median line between the two objections to repeated intrusions by Chinese
countries’ coastlines as marking their maritime coast guard vessels into Japanese waters around
border, but China has argued that its exclusive the Senkaku Islands, which are also claimed by
economic zone (EEZ) stretches further. Indeed, Beijing. Indeed, Tokyo subsequently said on
including the latest facility, Tokyo is reportedly June 24 that two Chinese coast guard vessels had
aware of Chinese gas development at 17 loca- navigated Japanese territorial waters for more
tions near the median line. than 64 hours this week, representing the longest
Following Japanese objections, incursion of its kind in around 10 years.™

Week 25 24•June•2022 www. NEWSBASE .com P11